Get ready for Single Touch Payroll

If you employ staff in Australia you should be aware of Single Touch Payroll.

Firstly, a little recap on Single Touch Payroll. STP is an ATO reporting change that has you report your payroll information at the same time you pay your employees. Say goodbye to end of year payment summaries, and hello to real time reporting straight from Xero. The Australian Taxation Office is committed to encouraging a level playing field for all businesses and interacting with businesses in a more digital way – which is exactly the point of Single Touch Payroll. The ATO have a good guide for getting ready for STP which you can access here.

Learn more: Single Touch Payroll – are you ready?

The first thing you need to do in Xero is ensure your organisation, payroll and employee information is up to date as the ATO will need this to identify each employee.

Organisation Settings

• Legal/Trading name
• ABN
• Street Address
• Postal Address
• Phone number
• Email address

Employee Details

• Full name
• Address
• Email address
• Date of birth
• Tax file number
• Employment status (full time, part time, casual)
• Terminate date for inactive employees

Payroll Details

• Pay Item types
• W1 Checkboxes

What will a STP pay day look like?

A lot like it does now! Except instead of reporting all of your payroll information to the ATO at the end of the year it will be reported with each pay. And come end of financial year the ATO will already have the most up to date information for each employee. This means no more Payment Summaries – yah! Instead your employees can use my.Gov to get their information.

Payment Summaries have been around for so long so please take the time to educate your employees of the new process and inform them of where they can get their information from now.

Single Touch Payroll does not negate the need to provide payslips to your employees.

Single Touch Payroll and Xero

Xero will be STP ready by 1st July 2019, but due to the very large number of organisations switching over they’re staggering the launch between July and December this year so there is no disruption for users. Xero have a deferral with the ATO so there will be no penalties to you opting in after 1st July if your file hasn’t switched over by then. The deferral is automatic and the number is 49410109. There is no need to enter this number into Xero or contact the ATO to quote it.

Setting up STP in Xero:

• Set up Two Factor Authentication.
• Review and update your settings:
  • Organisation Settings
  • Employee Details
  • Payroll Details
• Terminate any old employees who are still active in the system
• Look for the Opt-in banner in the Pay Run screen.
• Follow the steps to opt-in and connect to the ATO
• Process Pay Runs as normal
• File Pay Run information to the ATO – there’s a new box to complete this step
• Review Filing status – once submitted, the filing status will show within the Pay Run

If you have any questions about Single Touch Payroll or the end of financial year payroll process, please contact us.

If you’d like to save yourself the stress, we can set up Single Touch Payroll in your Xero file. Book using the link below.

Book a discovery call with Sarah

PS. Whenever you’re ready, here are 3 ways we can help you eradicate financial stress in your accounting firm or professional services business – faster …

1. Sign up to our LinkedIn newsletter, published weekly. You can sign up here: Eradicating Financial Stress

2. Get our book “Wow – I’m in Business! Your journey from overwhelmed to organised.” It’s full of insights, solutions and downloadable resources you can implement into your business immediately. Click here for your copy: Wow … I’m in Business! – Miss Efficiency

3. Book a time with me privately and we’ll do a deep dive into your Xero file to help you optimise for cash flow, efficiency and growth. Click here to book: Book a time with Sarah